2:30 on a Thursday Morning: A Disability Story
It was about 2:30 on a Thursday morning in December when I awoke to my husband JT telling me that he was going to the Emergency Department for severe abdominal pain and suspected appendicitis. With two young sleeping children, I wished him the best and stayed in bed thinking about how I was going to rearrange my day ahead. When he later told me that he didn’t have appendicitis and that he was still going to see a full day of clinic, I put it mostly behind me. I went ahead with the usual routine of preschool drop-off and pick-up, running my practice, housework and preparing for the upcoming holidays. It was after tucking the kids into bed, cleaning up dinner and sitting down on the couch when my husband uttered the words “I might have cancer. Dr. Cooper said that it wasn’t appendicitis, but the CT scan showed a mass”
In moments like these, it’s as if the world stops spinning. First it was shock and curiosity as I started asking questions that had no answers yet. We could do little but let it sink in and again, go about the routine work of running a household and managing careers. My second reaction was to begin making contingency plans for all kinds of outcomes, likely the manifestation of me seeking some sort of control. It had been less than six months since JT’s separation from the military and the safety net we had known for years was gone. With a new job and new health insurance, there was a lot to navigate. Additional scans, bloodwork, an inconclusive biopsy and eventually surgery occurred within the next five weeks.
Thankfully while sitting alone in waiting rooms, I was able to think of how fortunate we were to have resources in place that didn’t make this a crisis. Not having to worry about whether we had enough life or disability insurance allowed me to relax and focus on the more important matters at hand.
Myths and Truths about Disability Insurance
Myth: My employer provides disability insurance so I’m covered.
Truth: Most physician employers provide long-term disability insurance as a benefit, but the terms vary wildly. Many provide coverage at about 60% pre-disability earnings. Because it is employer paid, the benefit will be taxable income to the recipient. Employer policies should be evaluated for residual or partial disability benefits. Owning a second (supplemental) policy is good practice to provide budgetary breathing room in the event of disability as well as portable benefits due to job loss. COVID-19 has given plenty of physicians pause about their job security.
Myth: I got disability insurance a long time ago so I’m okay.
Truth: Income needs change and inflation happens. It’s good financial planning to calculate your current needs and increase coverage if warranted. Most disability policies come with riders to increase coverage without additional medical underwriting.
Myth: If I become disabled, I’ll depend upon my spouse’s income.
Truth: Depending on the disability, your spouse may need to do even more work in the home. Disability benefits may allow you to hire out critical services or adjust a spouse’s work load to provide care for you as a disabled individual. Healthcare related expenses will increase, sometimes dramatically, and other costly adjustments may affect the family budget. For example, mobility impairments may warrant the purchase of a different vehicle. If you don’t have a partner, even more services and care may need to be outsourced.
Myth: I’m nearing retirement, so I don’t need disability insurance anymore.
Truth: Serious illnesses in mid to late-career can still have a dramatic impact on a family’s financial wellness. For example, early onset Parkinson’s disease can carry unexpected and costly adjustments from medical equipment to home renovations. Claiming retirement benefits early may place a surviving spouse’s long-term financial plan in peril. Instead of canceling disability insurance, you may actually need to add long-term care insurance.
Myth: Insurance is a scam and is too expensive.
Truth: Human capital, or the ability to earn an income, is the most valuable asset of most young and mid-career professionals. Yes, it is expensive but it pales in comparison to the cost of not being able to work. Consider yourself fortunate that you CAN afford it and get a policy with a level premium sooner rather than later.
Myth: I’m too busy to go through the process of applying for coverage.
Truth: If you become disabled, you’ll have more than enough time to regret not willing yourself through the process. Confucius said, “Better a diamond with a flaw than a pebble without.” It’s far better to get a disability policy in place than it is to wait until you have hours to sift through online resources about how to pick the best policy. Here’s another post about letting go of perfection and getting it done.
Considerations for Military Physicians
Myth: Military physicians aren’t able to get disability insurance.
Truth: While many insurers don’t write policies for military members, there are options when working with an independent insurance broker. My clients have had good luck with MassMutual.
Myth: The Department of Defense or Veteran’s Affairs has disability coverage.
Truth: The disability coverage offered through the VA is limited and like many things in the military, it’s based on the number of dependents the veteran claims. The total benefit for a member with a spouse and three young kids would be just under $3,600/month or $43,000/yr. While it is tax-free and there are other types of compensation, I consider VA coverage sufficient for mid-career enlisted members and junior officers. It’s a far cry from adequate for all but the most frugal physicians. In some situations, a physician might qualify for military retirement, but even that option only replaces about 30-40% of pre-disability income. I typically find coverage needed in the 50-80% of pre-disability earnings range depending upon lifestyle, net worth, and family status.
Myth: I could get by on $3,600/month.
Truth: Okay, it’s not technically a myth because you could live on $3,600/month. But truer is that I’ve encountered very few physician families who are in a position where $3,600/month would provide the lifestyle they desire (and have worked hard to achieve). I’ll hold that position even accounting for cost-of-living differences. Low cost-of-living locations would be hard and high cost-of-living areas would be all but impossible.
The Good News
The mass in my husband’s abdomen turned out to be benign. I’m beyond grateful our story ended with good news and for the experience of learning firsthand about how quickly life can change. Assessing life and disability income needs is one of the first topics to tackle in a comprehensive financial plan. The ability to withstand an unexpected negative event is a core purpose of financial planning. Income protection needs are simply too important to ignore. This calculator at Life Happens is a good place to start in calculating coverage needs.
If you have either been putting off disability income insurance or have never considered it, now is the time to act. Enlist an independent insurance agent (able to write policies through multiple insurers) or a fee-only Certified Financial Planner™ professional to help you through the process. You don’t want to wake up at 2:30 AM and wish you had.